RIO DE JANEIRO (AFP) – Inflation in Brazil accelerated in October to an annualized 4.76 per cent, well above the central bank’s target of three per cent, according to official data.
The steady increase in consumer prices was the principal argument for the bank hiking its key Selic rate a half percentage point to 11.25 per cent.
It adds pressure on the left-wing government of President Luiz Inacio Lula da Silva, which is expected to soon unveil a raft of cost-cutting measures to balance the national budget.
October’s inflation reading showed a 0.56-per cent uptick, above the 0.44-per cent registered for September, the state IBGE statistics body said.
The rise was partly driven by higher electricity prices for homes and higher meat prices – both results of a months-long drought affecting farming and hydroelectric generation.
IBGE’s director of research Andre Almeida said the hike in the cost of meat “can be explained by shorter supply… owing to the dryer climate conditions and smaller number of slaughtered animals, as well as an increased export volume”.
The 4.76-per cent annualised inflation rate was slightly higher than the 4.73-per cent from the averaged forecasts of 31 financial and analytical institutions consulted by the economic publication Valor.
It was also above the central bank’s 4.5-per cent upper threshold of tolerance.
The bank has warned that its future rate decisions will “depend on how the inflation dynamic develops”.
